Sundar Pichai Just Inherited the Most High-Pressure Job at Alphabet

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Sundar Pichai Just Inherited the Most High-Pressure Job at Alphabet

Maciek Jasik

Larry Page has lofty goals for Alphabet. The new holding company was established to morph the search engine he and Sergey Brin founded in 1998 into a platform to technocharge the entire world. Self-driving cars! Glucose-monitoring contact lenses! Drone delivery! Longer human life! As he has done all along, Page will continue to plow resources into these endeavors, the moonshots. Most of that funding, however, will come from advertising, the business that made (the company formerly known as) Google a giant in the first place.

Which means that Sundar Pichai has just assumed Alphabet’s most high-pressure job. As CEO of the new Google, which is now a subsidiary of Alphabet, he’ll be responsible for keeping Google’s core business the well-oiled cash machine it has long been, even as it faces increasingly nimble competitors.

The scope of this challenge is tremendous. Google brought in $66 billion in revenue last year, and 89 percent of that came from display and mobile advertising. For Google to maintain that growth rate again this year, it will need to build new business the size of a mid-tier Fortune 500 company like Whole Foods (2014 revenue: $14.2 billion), and most of that will come from advertising.

Pichai inherits a healthy business, and one that he has mostly been running for awhile. Google remains a fast growing company, with plenty of opportunity ahead. The company beat expectations in its most recent earnings report, and new CFO Ruth Porat credited “core search, where mobile stood out, as well as YouTube and programmatic advertising.”

Google is facing product competition everywhere.

But there is incredible pressure for Google to keep the growth up even as the advertising landscape shifts rapidly from desktop to mobile, upending the economics of the business. Like every tech company, Google must contend with the fact that people are spending more time on their phones. Mobile searches now outnumber those on desktops. As a result, the industry has seen a decline in “cost per click,” the amount of money companies are paid when we click on ads. Although she was frustratingly short on details for Wall Street's taste, Porat offered the good news that the trend is slowing. She said the price gap between mobile and desktop is closing and desktop ad prices currently remain steady. But Google will see more competition on mobile devices as a slew of companies are trying to capture advertising dollars.

Everyone After Google

Beyond this, Google is facing product competition everywhere. As my colleague Julia Greenberg writes, Facebook has moved aggressively into online video, aiming squarely for Google’s YouTube business. The social giant is pushing hard into Google’s territory on all fronts, from in-app search to Facebook's Messenger app, which has become a complement to Gmail. Then there’s Amazon. As Eric Schmidt noted in a Berlin speech last October, Amazon is among Google’s biggest competitors in search: if Internet shoppers begin their shopping on Amazon, instead of Googling (often just to get to Amazon) their shopping interests, Google will lose out.

Pichai has the track record to navigate the challenge ahead. He joined Google in 2004 after completing a masters in material sciences and engineering from Stanford, an MBA from Wharton, and taking a bit of time along the way to work at Applied Materials and McKinsey. Nearly a decade ago, he argued forcefully for Chrome’s development, seeing concern ahead that Microsoft could modify Internet Explorer, the dominant search engine of the time, to make it more difficult for users to install the toolbar that made Google the default search engine. (If you’re reading this from a desktop, chances are that you are on a Chrome browser.) As Pichai rose at Google, he was given oversight of Google’s apps—Gmail, Calendar, etc—and became part of the company’s leadership team, reporting to Page. When Andy Rubin left Android to work on a secret robotics project, Page handed Android over to Pichai. Last October, in a move that was almost certainly preparing the company for its most recent restructuring, Page put Pichai in charge of most of Google’s enterprise, adding to his roster products like search, maps, and commerce.

A tall man with a pronounced slouch and a thick Indian lilt to his speech, Pichai combines a high IQ—he finished top of his class at India’s prestigious IIT and got a full scholarship to Stanford—with a reputation as a highly personable guy. When he was promoted last fall, venture capitalist Om Malik tweeted: “Proof nice guys can win.” Shortly after the news broke, I spoke with Bret Taylor, founder and CEO of enterprise software company Quip, who had worked with him at Google. “He has an incredibly strong EQ,” Taylor told me. “Some of the strongest I’ve seen.”

He’ll need these skills to keep the company’s primary sales engine running, enabling Alphabet to make good on its moonshots. Cars may drive themselves at the Googleplex, but companies will not.